Home Equity Reform Legislation Passes in Texas

AUSTIN, Texas - The Texas House of Representatives has passed SJR 42, the Home Equity Reform Legislation authored by State Senator John Carona and supported by the Texas Credit Union League. The measure includes the following provisions: authorization of lines of credit up to 50% of fair market value of the home; prohibition of line of credit access by credit cards, debit cards, or preprinted solicitation checks; an 80% total loan cap with only one home equity loan allowable at a time; a minimum line of credit draw of $4,000; administrative interpretive authority given to the Credit Union Commission, with a safe harbor for lenders who conform; and a "cure" provision allowing lenders to cure a loan in a manner dependent on the violation. Three amendments were added on the House floor. The first was a correcting amendment. The second moved the date Texas citizens will vote on the home equity constitutional amendment from November to September 13. A third House amendment would require that a borrower receive a disclosure one day prior to closing that delineates fees, points, costs, interest, and other charges to be included at closing. It also allows for the notice, in emergency situations, to be provided at closing. Senate concurrence is expected today; then it moves to the Governor's desk. The accompanying bill, SB 1067, also passed the House and has been enrolled.